Bush: No help from Washington for California power crunch

Bush meets with Cabinet members Monday to discuss California's power crisis

In this story: Bush aides tout broader view Critics target utility 'bailout' RELATED STORIES, SITES

WASHINGTON (CNN) -- President Bush said Monday that California's electricity shortages should be solved "in California by Californians" as he convened a Cabinet task force to examine long-term energy policy.

IN-DEPTH SPECIAL Online coverage of the energy crunch in California   ALSO   MESSAGE BOARD Power crisis

Bush said his administration will examine California's problems, but he offered little hope of federal help for the state.

"The task force that is being assembled will not only deal with the very short-run issue dealing with the West, but, obviously, the longer-term issues that will be confronting our country for a while unless we're willing to act boldly and swiftly," Bush said. "Which we will do."

California faced a 14th day with its electrical system at the highest level of alert, with rolling blackouts possible on short notice due to electrical scarcity. But fears that large numbers of Californians tuning into Sunday's NFL championship game would worsen the crisis never materialized.

The panel Bush announced Monday will be led by Vice President Dick Cheney and include Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Energy Secretary Spencer Abraham.

"We're very aware in this administration that the situation in California is beginning to affect neighboring states," he added. "Western governors came to see the vice president and they came to see me, as well. And they're deeply concerned about the situation spreading beyond the California borders, and so are we."

California's problems have sparked some grumbling among other states in the Northwest, which are beginning to face problems of their own. A severe drought and heavy power consumption have drawn down rivers feeding hydroelectric dams that during a normal year would generate 75 percent of the region's power.

Bush said "it's becoming very clear" that the country needs to develop new sources of energy, and the group that met Monday would explore ways of doing that.

Seeking new sources of energy was a prominent part of Bush's campaign, which included a controversial plan to allow oil exploration in Alaska's Arctic National Wildlife Refuge. Other proposals included developing alternative sources and coaxing U.S. allies in the Persian Gulf region and Latin America to provide reliable supplies.

Since both Bush and Cheney have backgrounds in the oil industry, the proposals became the focus of criticism from the Democratic opposition.

California's Independent System Operator, which manages most of the state power grid, said the state would remain under a Stage 3 emergency until midnight Monday. But ISO spokeswoman Lorie O'Donley said no blackouts would likely be necessary, and the system could get an additional 1,100 megawatts of power on Monday, when two units in Northern California come back on line.

Meanwhile, state officials worked over the weekend to secure support for a two-pronged plan to relieve the shortages -- one that consumer advocates decried as a taxpayer bailout of the utility industry.

Gov. Gray Davis and legislative leaders agreed Friday to take a share of ownership in the state's two largest utilities, which have teetered on the brink of financial collapse as deregulated wholesale electricity prices have soared.

Under the state's 1996 deregulation law, the power companies' ability to pass those increases along to customers is limited. The utilities -- Pacific Gas and Electric and Southern California Edison -- have been left without sufficient credit to buy the electricity their customers need.

The state would issue bonds to cover utility debts and make customers pay the money back over 10 years. In exchange, California would be granted long-term options to buy low-priced stock in the utilities.

The state would hypothetically make its money back when the price of utility stocks goes up, then selling the stock and using the profits to help pay off the bonds.

The second part of the proposal involves the state's move into the power-buying business. In an earlier measure, the state Legislature agreed to use $400 million of the state's surplus to purchase electricity for about one-fifth of what utilities must now pay; the state would then sell that power, at cost, to the utilities for statewide distribution.

"The state will be in the power business for a long time to come," Davis said Friday.

Davis spokesman Steve Meviglio called the plan a "win-win" solution, but many of those critical of California's deregulation process take a different view.

"We're being asked to bail out the utility companies for billions of dollars, but they're not worth billions of dollars," said Doug Heller, spokesman for the Foundation for Taxpayer and Consumer Rights.

Groups like Heller's want the state to play hardball, demanding that the utilities transfer assets, including power lines and generators, to the state in return for the money.

Last week, Bush extended an emergency order that required out-of-state companies to supply electricity and other energy to the state's power industry for two weeks, but aides said the president would not grant another extension.

The Associated Press contributed to this report.

As lawmakers plug power holes, consumer groups decry 'bailout'
January 27, 2001
California governor: Bonds would produce power and cash for consumers
January 25, 2001
Power-starved California seeking suppliers
January 25, 2001
Bush administration extends California power emergency order
January 23, 2001

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